Weekly Current Affairs (22nd to 30th June 2024) Part - 2 | Current Affairs & Hindu Analysis: Daily, Weekly & Monthly - UPSC PDF Download

GS3/Environment

Role of PESA in Forest Conservation

Why in news?

• A recent study has examined the connection between representation and forest conservation in India's Scheduled Areas. It has been found that providing political representation and decision-making power through acts such as PESA to tribal populations has helped in the conservation of forests.

What are the Key Findings of the Study?

About:

• The authors arrived at their conclusion by conducting a data-driven study on the Panchayat (Extension to Scheduled Areas) Act (PESA), which provides political representation to Scheduled Tribes (STs).
• The study compared villages with mandated ST representation in local self-government to those without it, villages that adopted PESA earlier to those that did later, tracking deforestation and afforestation rates. This allowed them to isolate the impact of PESA on forest cover using a "difference-in-differences" framework.
• This study used satellite data to analyze forestation changes on a global scale from 2001 to 2017, diverging from the traditional method of fieldwork in small communities.

Key Findings:

• PESA has granted STs greater political representation, allowing them a say in how forests are managed.
• It strengthens STs' ability to resist large-scale commercial activities like mining that can cause deforestation leading to a greater reduction in deforestation in PESA villages near mines.
• The introduction of PESA also increased the incidence of conflict around mining.
• The PESA Act led to an average increase in tree canopy by 3% per year reduction in the rate of deforestation.
• PESA increased economic incentives to ST communities in protecting the forest, for non-timber forest products (medicinal plants, fruits, etc.) and food security.
• The study found that the Forest Rights Act, 2006 had no additional impacts on conservation beyond those caused by PESA.
• The study advocated for a single institution that can balance conservation and development objectives. Such an institution would better navigate the complexities of balancing local economic interests with sustainable conservation practices.

What is the PESA Act?

Legislation:

• The Act defines as those mentioned in Article 244(1), which states that the applies to in states other than Assam, Meghalaya, Tripura, and Mizoram.
• Scheduled Areas of India are areas notified by the President as predominantly inhabited by tribal communities.
• 10 states have notified Fifth Schedule areas that cover (partially or fully) several districts in each of these states. These include Andhra Pradesh, Chhattisgarh, Gujarat, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, and Telangana.

Significant Provisions:

• Gram Sabha: The PESA Act establishes the Gram Sabha as a forum for community participation in the development process. It is responsible for identifying development projects, preparing development plans, and implementing these plans.
• Village-level Institutions: The Act mandates the establishment of village-level institutions, including the Gram Panchayat, the Gram Sabha, and the Samiti, to carry out development activities and provide basic services to the community.
• Powers and Functions: Gram Sabha are granted significant powers and functions related to managing natural resources and regulating economic activities.
• Consultation: Requires consultation with the Gram Sabha before any development projects or activities are undertaken in the Scheduled Areas.
• Funds: It provides for the transfer of funds to the Gram Panchayat to enable them to perform their functions effectively.
• Land Rights: The Act provides for the protection of land rights of tribal communities in the Scheduled Areas, requiring their consent before any land is acquired or transferred.
• Cultural and Social Practices: Safeguards the cultural and social practices of tribal communities in the Scheduled Areas, prohibiting any interference in these practices.

What are the Provisions Related to Scheduled Tribes in India?

Definition:

• The Constitution of India does not define the criteria for recognition of STs. As per Census-1931, STs are termed as "backward tribes" living in the "Excluded" and "Partially Excluded" areas.
• Government of India Act of 1935 called for the first time for representatives of "backward tribes" in provincial assemblies.

Constitutional Provisions:

• Article 243D: Mandates reservation of seats for STs in Panchayats
• Article 330: It provides Reservation of seats for SC and STs in the House of the People (Lok Sabha).
• Article 332: Reservation of seats for SC and STs in the Legislative Assemblies of the States.
• Articles 341 & 342: Define STs and empower the to identify them through a public notification for each State/Union Territory.

Statutory Provisions:

• Protection of Civil Rights Act, 1955 against Untouchability.
• Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989.
• Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996.
• Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.

Tribal Panchsheel Policy

 Mains Question: What is the PESA Act? How has this impacted the state of tribal people in India?

GS1/History & Culture

1975 Emergency and its Impact

Why in News?

• Recently, the Prime Minister of India has paid homage to all those great men and women who resisted the National Emergency of 1975. 25 June 2024 marked the 49th anniversary of the declaration of the national emergency in India.

What is an Emergency?

• It refers to legal measures and clauses within a country's constitution or laws that enable the government to respond swiftly and effectively to extraordinary situations, such as war, rebellion, or other crises that threaten the nation's stability, security, or sovereignty and democracy of India.

Provisions in Constitution:

• These provisions are outlined in Article 352 to Article 360 under Part XVIII of the Constitution.
• The emergency provisions in the Indian Constitution draw inspiration from Germany's Weimar Constitution.

Articles Subject Matter

• Proclamation of Emergency - Article 353
• Effect of Proclamation of Emergency - Article 354
• Application of provisions relating to the distribution of revenues while a Proclamation of Emergency is in operation - Article 355
• Duty of the Union to protect States against external aggression and internal disturbance - Article 356
• Provisions in case of failure of constitutional machinery in States - Article 357
• Exercise of legislative powers under proclamation issued under Article 356 - Article 358
• Suspension of provisions of Article 19 during Emergencies - Article 359
• Suspension of the enforcement of the rights conferred by Part III during Emergencies

Significance:

• These provisions usually give the executive branch temporary authority to bypass standard legislative procedures, limit certain rights and freedoms, and implement policies that would ordinarily fall outside its jurisdiction under normal conditions.

What are the Types of Emergency in the Indian Constitution?

• National Emergency (Article 352): Under Article 352, the President is empowered to declare a state of emergency if he is satisfied that the security of the country or any part thereof is threatened by war, external aggression (External Emergency), or armed rebellion (Internal Emergency).

Duration and Parliamentary Approval:

• The proclamation of emergency must be approved by both the houses of Parliament within one month from the date of its issue.
• If approved by both the houses, the Emergency continues for 6 months and can be extended to an indefinite period with an approval of the Parliament for every six months.

Revocation of Proclamation:

• A proclamation of Emergency may be revoked by the President at any time by a subsequent proclamation. Such proclamation does not require parliamentary approval.

Applicability of National Emergency:

• A proclamation of National Emergency may apply to the entire country or only a part of it.

Judicial Review of National Emergency:

• 38th Constitutional Amendment Act of 1975 made the declaration of a National Emergency immune to judicial review.
• 44th Constitutional Amendment Act of 1978 repealed this provision of the 38th Amendment, thereby restoring the judiciary's ability to review the declaration of a National Emergency.

State Emergency or President Rule (Article 356):

• Some of many Examples of Imposition of President Rule

Scope of Judicial Review

• The Supreme Court has laid down guidelines in various cases such as S.R. Bommai vs Union of India, 1994 and Rameshwar Prasad vs Union of India, 2006 regarding the use of Article 356.

Recommendation Regarding Article 356:

• Punchhi Commission recommended localising emergency provisions under Articles 355 and 356 by bringing only specific areas like a district or parts of a district under the President's rule instead of the entire State.

Financial Emergency (Article 360):

• This provision allows the state of financial emergency financial stability or credit of India or any part thereof is threatened.

How Many Times Emergency was Imposed in India?

• National Emergency has been proclaimed 3 times so far in India: Indo-China War (1962), Indo-Pak War (1971), and (1975-1977).

What were the Impacts of Imposing National Emergency in 1975?

• Constitutional Changes
• Emergency Acted as a Vaccine Against Dictatorship
• Vocalism About Rights
• Evolving Role of Judicial Activism
• Changes in Political Parties' Attitude

Conclusion

• India's Constitution has emergency provisions that include checks and balances, preventing their misuse.

Mains Question:

• What are emergency provisions under the constitution of India? How has the check and balance for the implementation of these provisions fixed the accountabilities of the Union government?

GS3/Economy

India's Water Stress and Hydropower

Why in news?

• Recently, Moody's Ratings has warned that India's escalating water shortage, climate change-driven natural disasters can disrupt several sectors including agricultural production and industrial operations which could undermine the country's sovereign credit strength.

Current State of Hydropower Generation in India

Current State of Hydropower Generation:

• Hydropower generation in India has declined by 17.33% from 162.05 billion units in FY23 to 133.97 billion units in FY24.
• India's installed large hydro capacity currently stands at 46.92 GW, constituting approximately 10% of the nation's total power generation capability of 442.85 GW.
• Capacity addition of large hydropower projects witnessed a decline in FY24, with only 60 MW added compared to 120 MW in FY23.

Factors Responsible of Low Hydropower Generation:

• Delayed and Irregular monsoons: The southwest monsoon has been delayed this year and the patchy rainfall due to El-nino Effect and a prolonged dry spell last year have left water reservoirs drying up.
• Low Reservoir Levels: India's 150 key reservoirs had a live storage of only 37.662 BCM, representing 21% of their live storage capacity and 80% less than the previous year.
• Shutdown of Hydropower Plants: Some hydropower plants were shut down in the last few years due to the adverse impact of floods and cloudbursts, and these plants are yet to resume operations.

Implications of Low Hydropower for Energy Sector:

• Increased Reliance on Thermal Power: With declining hydropower generation compared to last year, coal-fired power plants will have the load to meet the rising power demand.
• Disruptions in Power Supply: Industries with high water usage, such as coal power plants and steel makers, will be impacted by the shortage of water supply.
• Reduced Hydropower Potential: The decline in water availability will further limit the potential for hydropower generation, which is a crucial component of India's renewable energy component.

Current State of Water in India

Water scarcity: India has a large population (18% of the world's total) but limited freshwater resources (only 4% of the world's total). This makes it a water-stressed country.

Causes of Water Stress in India:

• Rapid Economic Growth and Urbanisation: India's population has grown rapidly, putting a strain on already stressed resources.
• Declining Water Availability: India's average annual water availability per capita is likely to drop, leading to water stress and scarcity.
• Climate Change and Weakening Monsoon Patterns: Warming of the Indian Ocean and changing weather patterns are affecting water resources.
• Agricultural Practices and Inefficient Usage: Agriculture accounts for a significant portion of India's water usage, straining water resources.

Implications of Water Scarcity in India:

• Health Impacts: Lack of access to safe drinking water can lead to various health issues like dehydration, infections, and waterborne diseases.
• Ecological Damage: Water scarcity poses a threat to wildlife and natural habitats.
• Reduced Agricultural Productivity: Water scarcity leads to reduced crop yields, affecting food security and increasing poverty among farmers.
• Economic Losses: Water scarcity can hamper India's economic growth and development.

Way Forward

Sustainable Groundwater Management: Implement projects for artificial recharge to groundwater, rainwater harvesting, and regulation of water reservoirs.

Smart Agriculture

• Drip irrigation can reduce water consumption and increase crop yield compared to flood irrigation.
• Cultivation of pulses, millets, and oilseeds should be encouraged in water-stressed regions.

Blue-Green Infrastructure

• Combining green and blue elements in modern infrastructure planning can provide a sustainable natural solution for watershed management.

Modern Water Management Techniques

• Information Technology can be integrated with water-related data systems for enhanced management and efficiency.

Mains Question:

What is Water Stress? Discuss the current challenges related to water management in India?

GS3/Economy

Rooftop Solar in India's Energy Sector

Why in news?

• As of March 2024, India's total installed rooftop solar (RTS) capacity stood at 11.87 gigawatts (GW), with a notable increase of 2.99 GW in installed capacity during 2023-2024. This highlights the substantial transformative potential of RTS within India's energy sector.

What is the Rooftop Solar Programme?

About:

• The government introduced the Rooftop Solar Programme in 2014 to promote rooftop solar installation.
• The original target was 40 GW installed capacity (out of 100 GW by 2030) by 2022 but the goal was not met by 2022, the deadline was extended to 2026.
• Rooftop solar panels are photovoltaic panels installed on the roof of a building and connected to the main power supply unit.

Objective:

• To promote grid-connected solar rooftop systems on residential buildings.

Historical Context:

• This program was launched as part of the Jawaharlal Nehru National Solar Mission in 2010, the Initial target was 20 GW of solar energy by 2022 then the revised target was 100 GW by 2022, including 40 GW from RTS.

Key Initiatives under Rooftop Solar:

• SUPRABHA (Sustainable Partnership for RTS Acceleration in Bharat).
• SRISTI (Sustainable Rooftop Implementation for Solar Transfiguration of India).

Implementation and State Performance

• Centrally driven by the Ministry of New and Renewable Energy (MNRE and executed through state nodal agencies and power distribution companies.

Top performers States:

• Gujarat, Maharashtra, Rajasthan.

Moderate performers:

• Kerala, Tamil Nadu, Karnataka.

Underperformers:

• Uttar Pradesh, Bihar, Jharkhand.

What is the Significance of the Rooftop Solar Programme?

Decentralised Energy Production:

• It reduces dependency on centralized power grids and enhances energy security and resilience by installing rooftop solar panels in targeted households.

Economic Advantages:

• It lowers electricity bills for consumers, creates jobs in the solar industry, and reduces the need for expensive grid infrastructure upgrades.

Energy Independence:

• It empowers consumers to become 'prosumers' (producers and consumers) and reduces reliance on fossil fuels and energy imports.

Rural Electrification and Energy Diversification:

• It provides power to remote areas not connected to the main grid, improves the quality of life in underserved communities, and contributes to a more diverse and stable energy mix.

Sustainable Development:

• It aligns with UN Sustainable Development Goals (SDG 7) and supports India's commitment to renewable energy and climate action.

What is India's Current Solar Capacity?

India's Rooftop Solar Capacity:

• India's total installed rooftop solar capacity is reported to be approximately 11.87 GW, with Gujarat leading the table followed by Maharashtra, as of March 2024.

The overall RTS potential of India is approximately 796 GW.

Regarding total solar capacity, the states that India had achieved approximately 73.31 GW by December 2023, with Rajasthan leading at 18.7 GW and Gujarat following at 10.5 GW

What is PM Surya Ghar Muft Bijli Yojana?

It is a scheme aimed at providing RTS systems in 1 crore households.

• Under this initiative, participating households can receive 300 units of electricity free every month.
• The scheme targets residential consumers with systems up to 3 kW capacity, covering a majority of households in India.

Registration and Installation:

• To initiate the installation, interested residents must register on the national rooftop solar portal and select a vendor from the provided list.
• Eligibility requires a valid electricity connection and no prior subsidy availed for solar panels.

Financial Setup:

• The scheme is financed with a central allocation of Rs 75,021 crore, primarily distributed as direct subsidies to consumers.
• It also includes provisions for payment security in renewable energy service company models and supports innovative projects.

Key Benefits:

• It includes free electricity, reduced electricity bills, payback periods ranging from three to seven years, lower costs for the government, increased adoption of renewable energy, and decreased carbon emissions.

What are the Different Challenges and Way Forward Related to RTS?

High Initial Costs:

• A typical 3 kW residential system costs around Rs. 1.5-2 lakhs (before subsidies) and Commercial installations can cost Rs. 40-50 per watt.

Policy Reforms:

• Expand and Simplify Subsidies, increase subsidy coverage for larger systems, and streamline the subsidy disbursement process

Innovative Financing Models:

• Promote solar leasing and power purchase agreements (PPAs) les.

Limited Awareness:

• Only 20% of RTS installations are in the residential sector (CEEW report) which poses a significant hurdle to its installation in rural sectors.

Awareness and Outreach:

• Launch comprehensive public awareness campaigns. And leverage social media and community engagement programs.

Grid Integration Challenges:

• In India, states like Rajasthan, Gujarat, and Tamil Nadu face issues with grid stability due to intermittent solar generation.

Grid Modernization:

• Invest in smart grid technologies to better integrate distributed solar generation.
• Promote energy storage solutions to address intermittency issues.
• Develop better forecasting and management systems for solar power

Limited Skilled Workforce:

• India needs an estimated 300,000 skilled workers in the solar sector by 2022 and lack of skilled force is one of the prominent reasons behind the noncompletion of the target.

Capacity Building and Technology and Innovation:

• Expand training programs like 'Suryamitra', and partner with educational institutions.
• Invest in R&D for more efficient and cost-effective solar technologies.

Mains Questions:

What are the primary challenges associated with rooftop solar installation and What need to be done to address them?

GS2/International Relations

Why in news?

• Recently, Russia has sent two trains carrying coal to India through the International North-South Transport Corridor (INSTC) for the first time. The consignment will travel over 7,200km from St. Petersburg, Russia to Mumbai port via Bandar Abbas of Iran.

What is the International North-South Transport Corridor (INSTC)?

About:

• INSTC is a 7,200-kilometer Multimode Transit Route linking the Indian Ocean and the Persian Gulf to the Caspian Sea via Iran and onward to northern Europe in Russia.

It connects ship, rail, road routes for moving cargo between India, Iran, Azerbaijan, Russia, Central Asia, and Europe.

Origin:

• It was launched on 12 September 2000 by a trilateral agreement signed by Iran, Russia at the Euro-Asian Conference on Transport in 2000 for promoting transportation cooperation among the Member States.

Ratification:

• Since then, INSTC membership has expanded to include 10 more countries (total 13) - Azerbaijan, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Ukraine, Syria, Belarus, Oman.

Routes and Modes

Central Corridor:

• It begins from the Jawaharlal Nehru Port in Mumbai and connects to the Bandar Abbas port (Iran) on the Strait of Hormuz. It then passes through the Iranian territory via Nowshahr, Amirabad, and Bandar-e-Anzali, runs along the Caspian Sea to reach the Olya and Astrakhan Ports in Russia.

Western Corridor:

• It connects the railway network of Azerbaijan to that of Iran via the cross-border nodal points of Astara (Azerbaijan) and Astara (Iran) and further to Jawaharlal Nehru port in India via sea route.

Eastern Corridor:

• Russia to India through the Central Asian countries of Kazakhstan, Uzbekistan, and Turkmenistan.

What is the Significance of INSTC for India?

• INSTC allows India to bypass chokepoints like the Red Sea (Suez Canal route), making its trade more secure.

Enhanced Connectivity with Central Asia:

• It connects India to markets in Russia, the Caucasus, and Eastern Europe, facilitating trade, energy cooperation, defense, counterterrorism, and cultural exchanges with Central Asian Republics through initiatives like "Connect Central Asia".

Energy Security:

• The INSTC facilitates India's access to energy resources in Russia and Central Asia and can reduce reliance on the Middle East.

Strengthening Ties with Iran and Afghanistan:

• India has invested in the Chabahar Port in Iran's Sistan-Balochistan province and signed an agreement for the INSTC, aiming to facilitate trade with Central Asian countries.

What are the Challenges Related to Full Utilization of INSTC?

• Limited International Funding:
• 
  
  • INSTC lacks financial funding from major institutions like the World Bank, Asian Development Bank.
• US Sanctions on Iran:
• 
  
  • The harsh sanctions imposed on Iran after the US's withdrawal from JCPOA in 2018 resulted in many global companies withdrawing from infrastructure projects in Iran.
• Security Concerns in Central Asia:
• 
  
  • The presence of terrorist organizations like the Islamic State (IS) in Central Asia poses a significant security threat along the corridor which can deter investment and smooth operation of the route.
• Differential Tariffs and Customs:
• 
  
  • Disparities in customs regulations, tariff structures across member states create complexities and delays for cargo movement.
• Uneven Infrastructure Development:
• 
  
  • The corridor utilizes various modes of transport (ship, rail, road). Uneven infrastructure development across member states, particularly underdeveloped rail networks in Iran, creates bottlenecks and hinders the seamless movement of goods.

Way Forward

Proactive Approach:

• A proactive approach, particularly by founding members India and Russia, is crucial for the success of INSTC. This could involve joint marketing efforts, infrastructure development initiatives, and diplomatic efforts to address political hurdles.

Financing Gap:

• Infrastructure development and corridor maintenance require substantial investment. Private sector participation should be encouraged mitigating risks through improved security and political stability.

Streamlining Customs and Tariffs:

• Implementing a harmonized customs regime and implementing mutual recognition agreements would simplify procedures and expedite cargo movement.

Conclusion

The INSTC corridor has the potential to create a strong trade connection between India, Russia, Iran and Baltic and Scandinavian countries. It could boost economies, improve relations between involved countries, and counter China's influence in Central Asia. However, there are challenges like bureaucracy and regional conflicts that need to be addressed for INSTC to be successful.

Mains Question:

What is the geopolitical and geoeconomic importance of the International North-South Transport Corridor (INSTC) for India?

GS3/Science and Technology

Why in news?

• A recent study revealed chimps' ability to dance in tune with rhythmic music suggesting an evolutionary link in our sense of rhythm. archaeological evidence, including a 40,000-year-old flute made from animal bone, provides insights into the origins of human musical expression.

What are the Findings of the Recent Study?

• Origin of Music in Humans: According to this study, humans likely began singing after the development of speech during the Old Stone Age, approximately 2.5 million years ago. Evidence suggests that the ability to play musical instruments emerged around 40,000 years ago, exemplified by the discovery of a flute made from animal bone with seven holes.
• Musical Notations: In India, musical notes ('sa, re, ga, ma, pa, da, ni') are believed to have originated during Vedic times (1500-600 BCE), forming the basis of Indian classical music traditions. Musical notation systems were established independently in Europe and the Middle East around the 9th century BCE, using spaced notations ('do, re, mi, fa, sol, la, ti').
• Evolution of the Indian Music System: Indian music evolved in the ancient, medieval, and modern periods.

How Indian Music Evolved in the Ancient Period?

• Origins in the Sama Veda: The roots of Indian music stretch back to the Sama Veda, where slokas were harmonized with music. Narada Muni introduced the art of music to humanity and imparted knowledge of Naada Brahma, the cosmic sound that permeates the universe.
• Development of Vedic Music: Initially centered around single notes, Vedic music progressively incorporated two and then three notes. This evolution culminated in the establishment of the seven basic notes (sapta swaras) that form the basis of Indian classical music.
• Early Tamil Contributions: Scholars like Ilango Adigal and Mahendra Verma contributed significantly to the musical ideas in ancient Tamil culture, documented in texts such as Silappadi Kaaram and Kudumiyamalai inscriptions.

How Indian Music Evolved in the Medieval Period?

• Unified Musical System: Up until the 13th century, India maintained a cohesive musical system grounded in fundamental principles such as saptaswaras (seven notes), octaves, and sruti (microtones).
• Introduction of Terms: Haripala coined the terms Hindustani and Carnatic music, marking the distinction between northern and southern musical traditions.
• Impact of Muslim Rule: With the arrival of Muslim rulers in North India, Indian music assimilated influences from Arabian and Persian musical systems.

How Indian Music Evolved in the Modern Period?

• Legendary Musicians: Renowned musicians like Ustad Alladia Khan, Pt. Omkarnath Thakur, Pt. Vishnu Digambar Paluskar, and Ustad Bade Gulam Alikhan emerged as icons of 20th-century Hindustani music, enriching the tradition with their mastery and innovations.
• Preservation through Notation: The advent of ensured the preservation and accessibility of musical compositions across generations, safeguarding invaluable musical heritage.
• Systematization of Hindustani Ragas: Pandit Vishnu Narayan Bhatkhande played a pivotal role in systematizing Hindustani Ragas under the 'Thaat' system, laying a structured foundation for musical education and performance.

GS3/Economy

Trends in Remittances Inflow

Why in news?

According to the latest report by the World Bank, the growth in remittances to India is likely to halve in 2024 compared to 2023. This slowdown is attributed to reduced outflows from GCC (Gulf Cooperation Council) countries, amid declining oil prices and production cuts.

What are Remittances?

Remittances are the funds or goods that migrants send back to their families in their home country to provide financial support. They are an important source of income and foreign exchange for many developing countries, especially those in South Asia. Remittances can help alleviate poverty, improve living standards, support education and health care, and stimulate economic activity. India sent out 18.7 million emigrants in 2023.

Growth of Remittances:

• India received USD 120 billion in remittances in 2023 with growth at 7.5%.
• It is forecasted to grow at 3.7% in 2024 to reach USD 124 billion, while the growth estimate for 2025 is 4% and it is expected to reach USD 129 billion by 2025.

Remittances Inflows in Countries:

• In 2023, India topped in remittances inflow list, followed by Mexico (USD 66 billion), China (USD 50 billion), Philippines (USD 39 billion), Pakistan (USD 27 billion).
• India's foreign assets increased more than liabilities in 2023-24 according to RBI data.

What are the Factors Affecting Remittance Flows to India?

Top Sources of Remittances for India:

• Around 36% of total remittance flows to India are sent by high-skilled Indian migrants residing in 3 high-income countries like the United States, the United Kingdom, Singapore.
• The post-pandemic recovery led to a tight labour market in these regions, resulting in wage hikes that boosted remittances.

Reason for Consistent Remittance Inflow:

• Strong Economic Conditions: In developed economies like the US, UK, and Singapore lower inflation and strong labour markets have benefited skilled Indian professionals increased remittance inflows to India.
• High employment growth and a general decrease in inflation in Europe contributed to the increase in remittances worldwide.

Diversified Migrant Pool:

• India's migrant pool is no longer concentrated solely on high-income countries. A significant portion resides in the GCC, offering a buffer during economic downturns in either region.
• Favorable economic conditions in GCC, including high energy prices curbed food price inflation have positively impacted employment and incomes for Indian migrants, especially those in less-skilled sectors.

Improved Remittance Channels:

• Initiatives like Unified Payment Interface (UPI) enabled real-time fund transfers, allowing remittances to be sent and received instantly.
• National Payments Corporation of India (NPCI) has allowed NRIs to use UPI in several countries including Singapore, Australia, Canada, Hong Kong, Oman, Qatar, USA, Saudi Arabia, United Arab Emirates, and the United Kingdom, Sri Lanka, Bhutan, Mauritius, France, Nepal.

How can Remittance Inflow in India be Increased?

Boosting Financial Inclusion:

• World Bank data indicates only 80% of Indians have bank accounts.
• Expanding formal financial services, especially in rural areas can facilitate easier remittance transfers through a wider network of bank branches, ATMs, and digital platforms.

Reducing Remittance Costs:

• As per data, India has high remittance costs (5-6%).
• Introducing competition between remittance service providers, promoting digital channels, lower transaction costs, government incentives for formal channels can boost adoption.

Enhancing Remittance Infrastructure:

• Upgrading payment systems and leveraging new technologies like blockchain can streamline the remittance process.
• Reserve Bank of India's Centralized Payment System Real Time Gross Settlement (RTGS) National Electronic Funds Transfer (NEFT) is a step towards this goal.

Targeted Diaspora Engagement:

• Increased government engagement with the Indian diaspora through programs like Pravasi Bharatiya Divas Know India Programme can strengthen connections.
• Offering attractive investment options and tax breaks, as suggested by the International Monetary Fund (IMF) data can incentivize higher remittance inflows.

Promoting Economic Stability:

• Implementing sound macroeconomic policies, improving the ease of doing business, and addressing corruption is crucial for diaspora confidence which can create a more attractive environment for remittance flows.

Mains Question:

Analyze the factors influencing remittance inflows to India and discuss the policy measures that can be implemented to enhance their contribution to the Indian economy.